More hires slated for SGX, but no acquisitions

The Singapore Exchange (SGX) has plans to make further
executive-level hires, but stresses that future growth will be organic.

“We might add someone in
commodities and may launch some FX products later this year and will need to
build our strengths there,” said Muthukrishnan
‘Ramu’ Ramaswami, president of SGX.

“We’re opportunistic hirers so there
are no constraints in what type of person we can hire. We can look to bring
experienced people in from the industry – we’re not in any rush and it will be
a steady build up.”

In June, SGX appointed Nico Torchetti
as post-trade services head as it expanded its post-trade business, including
building SGX’s Central Depositary. The exchange is now conducting a similar
technological push on the post-trade environment for securities that it has
done for derivatives.

In
April, Jenny Chiam joined SGX from Nomura as head of securities in order to
drive the exchange’s equities business. She replaced Nels Friets, who will soon
retire.

The
exchange president admits that SGX does not have the scale that some of
the western exchanges have. He feels that the challenge is to grow by building
scale and being competitively globally.

“If it was just a matter of building
resources we could buy a western exchange,” said Ramaswami. “That’s not our
game in the sense that we’re not just looking for scale for its own sake, but
we want to be the best provider within Asia. We
have to grow scale by accelerating market development, not just increasing our
own size.”

Such an organic approach to growth
was not the philosophy of Hong Kong Exchange and Clearing, which ventured to
Europe and bought the London Metals Exchange.

“Hong Kong has gone the inorganic way
of building size,” he said. “It will be interesting to see how that works in
the next two to three years. However, insofar as the London Metals Exchange is
concerned, I’m not ashamed to say we couldn’t have afforded the price they
paid.”

SGX is positioning itself as a
gateway to Asia, incorporating ASEAN countries and India, whereas it sees Hong
Kong’s edge the links to China.

SGX has been spending S$30 million to
S$40 million per year to pay for its technological development for the last
five years and plans to maintain that figure going forward. The exchange is now at a steady state of
cashflow on what they spend on technology, with new investment matching depreciation.

Five years ago, SGX built a new
derivatives infrastructure and trading engine and Ramaswami says that is why
their derivatives business has grown at the rate that it has grown.

SGX reported this week its total
futures and options volume increased 52% year-on-year to 8.8 million contracts.
In that period SGX’s China A50 Index Futures volume more than doubled to 1.7
million contracts.